Section 81 of the Commonwealth Constitution provides that ‘all revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution’.

There is a long-standing controversy as to the effect of the words ‘for the purposes of the Commonwealth’–one school of thought maintaining that the words leave an unfettered choice to the Commonwealth of the objects for which it may appropriate money and another school of thought propounding the view that the words are restrictive in their operation and confine the appropriation power to matters which properly fall within the legislative authority of the Commonwealth Parliament under sections 51 and 52 of the Constitution. My personal view is that the restrictive interpretation is the correct one, for reasons which need not be gone into at present.

As against this, however, it must be understood that the practice of the Commonwealth in the past has proceeded upon the more liberal view. This is also the case in the United States of America, where Constitutional theory has very largely favoured the cutting down of the objects of appropriation, whereas Parliamentary practice has been based upon the notion that the power of appropriation was unlimited. In view of these facts, and of the technical difficulties which are in the way of an effective challenge to an Appropriation Act passed by the Commonwealth Parliament, I would feel justified in advising the Treasury to proceed upon the footing that section 81 was a sufficient warrant for the form and substance of the Bill now presented to me for consideration. It is, however, unnecessary to go to the length of actually so advising, for I am satisfied that the Bill can be amply supported under section 96 of the Constitution. That section provides that ‘the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit’.

The granting of financial assistance under section 96 is undoubtedly a ‘purpose of the Commonwealth’ under section 81, whichever interpretation of the latter section may be adopted. It is, however, suggested that the Bill now under examination does not fix the terms and conditions of the financial assistance to the States, but directs that the grants made to a State shall be made ‘upon such conditions as the Treasurer approves’; and that section 96 requires that the terms and conditions shall be such as the Parliament thinks fit and not such as some delegated authority may think fit.

It would ill-become me to speak slightingly of such an argument since I advanced it myself in the State of Victoria v. Commonwealth, 38 C.L.R. 399, in relation to the Federal Aid Roads Act 1926. In that case the Act in question appropriated moneys for the purposes of an agreement between the Commonwealth and the States. The agreement dealt with the making of roads, and remitted wide discretionary powers to a Commonwealth Minister. For example, the works to be carried out by the States had to be approved in writing by the Minister. The High Court found that the Act fell within the powers contained in section 96 of the Constitution, and although the Judges did not in their judgments deal with this particular argument, it was made clear during the hearing of the case that they could see nothing inconsistent with section 96 in an Act of Parliament which, in effect, approved any advance of such conditions as might be imposed by the Executive Government. In other words, I think it must now be taken that the phrase ‘such terms and conditions as the Parliament thinks fit’ effectively covers ‘such terms and conditions as the Executive Government may impose pursuant to authorisation by an Act of Parliament’. I am, therefore, of opinion that the proposed Bill will be a valid exercise of the Commonwealth’s legislative power.

[Vol. 27, p. 619]